FinCEN’s New Rules Aim to Shake Up Bitcoin’s CoinJoin Services and Mixers

FinCEN's Proposed Regulations Could Affect Bitcoin's CoinJoin Services and Mixers

Source: AdobeStock / Vladimir Kazakov

If you’re a digital asset investor who enjoys the cryptocurrency mixer dance, then hold on to your virtual hats because the Financial Crimes Enforcement Network (FinCEN) is about to crash the party! They’ve just proposed new rules that could seriously cramp the style of crypto mixers like Bitcoin’s CoinJoin.

But what exactly are these proposed rules? Well, if you thought mixing virtual currencies was as innocent as shaking a cocktail, think again! FinCEN wants to label it as a “primary money laundering concern.” Talk about raining on our parade!

According to Protos, these rules would affect both dedicated tumblers, like Tornado Cash, and service providers utilizing basic privacy protocols. It seems FinCEN is getting serious about cracking down on malicious actors who use crypto-mixing services for their dirty deeds.

• The Wild Ride of Bitcoin Miners: Holding Strong Above $30,000
• Vulnerability Discovered in Bitcoin Lightning Network: An Electric Shock to the System
• Is Argentina Ready to Tango with Bitcoin? 🕺💃

In fact, they even dropped some big names like Hamas, Russian criminal organizations, and the Democratic People’s Republic of Korea (aka North Korea) in their report. Who knew mixing coins went hand in hand with political intrigue? Maybe we should start calling it “coinspiracy” instead!

But why all the fuss? Well, it turns out that groups like Hamas and Palestinian Islamic Jihad have been receiving Tron-based USDT and digital asset donations. And trust me, when you have cryptos floating around like that, it can get pretty murky. So, FinCEN wants more transparency and compliance measures. They want to know who’s doing what with their virtual cash.

If these rules go into effect, financial institutions will have to keep detailed records and reports of transactions involving digital asset tumblers. It’s like having a personal stalker, but instead of tracking your every move, they’re keeping tabs on your virtual currency adventures. So much for anonymity!

In a nutshell, FinCEN’s proposal means that crypto tumblers will have to jump through some hoops. They’ll need to comply with know-your-customer (KYC), anti-money laundering (AML), and combating the financing of terrorism (CFT) requirements. It’s like a never-ending obstacle course just to mix some virtual coins!

But wait, there’s more! These proposed rules are grounded in Section 311 of the USA Patriot Act. That’s right, the same act that empowers the Treasury Secretary to take special measures against “primary money laundering concerns.” And these measures could include everything from prohibiting certain accounts to imposing recordkeeping and reporting requirements. It’s like FinCEN is unleashing a financial superhero!

So, who will be the victims of these new regulations? Well, last year, Tornado Cash got the taste of sanctions from the Office of Foreign Asset Control (OFAC). And let me tell you, that wasn’t a walk in the park. The sanction generated quite a stir, with some arguing that it unfairly targeted honest users seeking privacy. It was like the regulators were storming into our secret hideout!

And as if that wasn’t enough, CoinJoin services like CoinJoinXT and Wasabi Wallet are also likely to be affected. These operators may face even more obligations to collect, record, process, and disclose extensive data to the government. It’s like turning our cherished privacy tools into bureaucratic nightmares!

But fear not, fellow crypto enthusiasts! These proposed rules are not set in stone just yet. There will be a 90-day public comment period before the Treasury Secretary, Janet Yellen, potentially puts her stamp of approval on them. So, let your voices be heard and let’s hope for some common sense to prevail!

In the meantime, let’s not forget the importance of CoinJoins. They’re not just some fancy coin mixer, but they provide us with basic financial privacy. Think of it as a secret handshake in the world of cryptocurrencies. It’s a collaborative transaction where all parties put in and get out the same amount of crypto, but the addresses are mixed up, making it darn near impossible to trace the origin of the coins.

So, my fellow investors, brace yourselves for the potential storm ahead. The crypto-mixing dance floor may be getting a little crowded with regulators, but let’s not lose hope. After all, innovation has always found a way to break through the chains of regulation. So, keep calm, hodl on, and let’s see where this wild ride takes us! And if you have any thoughts or funny stories about mixing virtual currencies, I’d love to hear them in the comments below. Let’s make the best out of this situation and have a laugh while we navigate the crypto seas together!

We will continue to update Blocking; if you have any questions or suggestions, please contact us!